BACHELOR OF HUMAN RESOURCE MANAGEMENT WITH HONOURS

MAY / 2023

BBIH4103

INTERNATIONAL HUMAN RESOURCE MANAGEMENT

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1.0 INTRODUCTION

The field of International Human Resource Management (IHRM) has emerged as

a response to the challenges posed by globalization and cultural diversity. Its primary
objective is to enable organizations to gain a competitive edge by effectively managing
personnel from different backgrounds and fostering a harmonious integration of diverse
workforce (Trompenaars & Woolliams2003). Multinational corporations/enterprises
(MNCs/MNEs) have emerged in the United States, Europe, and Asia with the aim of
achieving diversification, global scale, or capitalizing on emerging trends. The
emergence of these entities can be traced back to their origins in the United States, which
was driven by the increasing demand for products and services that extended beyond the
national borders of the country. The issue of sustainable competitive advantage has
emerged as a central concern for multinational corporations (MNCs), particularly in light
of cultural constraints, socio-political variations, and technological disparities worldwide
(Harzing, 2001; Perlmutter, 1969). Consequently, the implementation of effective human
resource management (HRM) practices has become critically important for all business
enterprises, as international HRM (IHRM) is recognized as a strategic function due to the
pivotal role of individuals in ensuring sustainability (Poole, 1990). This assignment
focuses on the examination of the human resource management (HRM) structures and
practices employed by Toyota Motor Corporation (TMC), a multinational automotive
company headquartered in Toyota City, Japan.

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COMPANY BACKGROUND
The Toyota Motor Corporation, which is based in Aichi, Japan, is a multinational
automotive manufacturer that employs a workforce of more than 300,000 individuals.
Established in 1937, the aforementioned brand holds the distinction of being the largest
automobile brand in Japan and is positioned as the second-largest automobile
manufacturer in terms of production volume. As of June 2012, Toyota had manufactured
a total of 200 million vehicles. The company places a significant emphasis on the
provision of superior quality and energy-efficient products at competitive prices, thereby
appealing to international consumers and cultivating a robust reputation in both Europe
and America. Toyota's branches are experiencing robust growth in numerous countries,
thereby solidifying its position as a prominent global player in the automotive sector. The
official website of Toyota global, available in multiple languages, serves as a platform for
disseminating the latest information, various facts, and data to the public. This website
facilitates the transmission of information from Toyota in Japan to a global audience,
thereby transforming it into a worldwide entity. Toyota has been widely recognized as the
archetypal example of lean production, as initially presented in the book "The Machine
that Changed the World" (Womack et al., 1991). This concept pertains to a novel
approach to manufacturing enterprises that emphasizes the eradication of waste in all
facets of production.

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INTERNATIONAL STAFFING APPROACH
According to Kang and Shen (2016), one of the most important aspects of global
talent management is international staffing, which encompasses both the recruiting and
selection procedures. It discusses "critical issues faced by MNCs concerning the
employment of home, host, and third-country nationals to fill key positions in their
headquarters and subsidiary operations" (Scullion & Collings, 2006, page 3). These
concerns pertain to the hiring of individuals from the home country, the host country, and
other countries. The company's workforce is the most valuable resource the business has.
According to Buckley et al. (2018), it is thus vital to employ an appropriate staffing
strategy in order to recruit and retain high-quality workers.
Certain corporate structures exhibit diversity due to the presence of extreme belief
systems. For instance, managers originating from their respective home countries may
hold the conviction that their existing system is superior, thus questioning the need for
any alterations. The alternative perspective held by some managers is that the challenges
experienced in a particular country are attributed to the inherent difficulties of that
specific context, leading them to adopt a laissez-faire approach. Nevertheless, there are
individuals who seek areas of agreement, given the increasing expenses associated with
the notion of cultural superiority (Hofstede & Bond, 1988; Harzing, 2001). These
structures are.

Ethnocentric Approach
This practice entails the predominance of the home country's culture, even within
subsidiary branches. Centralization of control and decision-making processes is
implemented due to a lack of trust in local authorities, both in terms of ensuring the
security of company products and addressing the scarcity of skilled personnel in
disciplines such as finance. Expatriates are often assigned to assume leadership roles in
subsidiary companies. The mandate pertains to the implementation of the corporate
culture of the headquarters by expatriates (Caligiuri & Stroh, 1995; Perlmutter, 1969).
The primary operational endeavors, such as research and production, are carried
out at the central administrative location, regardless of the fact that the domestic market
contributes a smaller proportion of sales. The primary manufacturing facilities are located
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within the domestic borders, while subsidiary entities house only secondary production
lines. The development of performance indicators is conducted centrally, without taking
into account local contextual factors. Multinational corporations (MNCs), frequently
originating from the United States and the United Kingdom, exhibit an ethnocentric
organizational framework, rendering them as non-national entities devoid of any
significant national influence. Although it is possible to engage in global business, the
notion of truly global practices remains elusive. There is a viewpoint held by certain
individuals that multinational corporations (MNCs) are more effectively managed when
their operations are centralized in their home country. This perspective is based on the
notion that such corporations can leverage established and proven methodologies.
However, it is argued that this approach may result in the omission of superior
personnel and practices available in foreign locations.

Polycentric Approach
Polycentricism refers to an indirect management system that originates from the
home country. The organizational structure of The Whole Corporation can be
characterized as a confederation, wherein each subsidiary is overseen by a local manager
who is a native of the host country (Perlmutter 1969; Tempel & Walgenbach 2012).
When implemented within a specific region characterized by a homogeneous culture,
such as the Middle East or West Africa, the phenomenon is referred to as regiocentrism
(Caligiuri & Stroh, 1995).
Polycentrism within organizations frequently emerges as a result of decisions
made by top-level executives or shareholders, as well as the influence of host country
mechanisms. Managers who possess a robust social standing, familial lineage, and
comprehensive comprehension of corporate protocols are frequently entrusted by the
central administrative body. Nevertheless, there exist constraints on their potential for
advancement within the organizational structure. Managers frequently conflate
polycentrism with multi-nationality, employing the lack of expatriates at subsidiary
locations as a rationale. The duplication of resources results in inefficiency and the failure
to fully utilize local capabilities.

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Geocentric Approach
The current trend in multinational corporations (MNCs) is to incorporate their
subsidiaries and headquarters into a unified business structure, integrating both their
business operations and human resource management (HRM) practices. This approach
enables MNCs to incorporate local elements while ensuring adherence to regulatory
requirements (Perlmutter, 1969). Advocates contend that borderless businesses
necessitate the adoption of certain operational practices, as posited by Ferner et al.
(2001).
The company prioritizes competence and embraces a diverse workforce, valuing
individuals of various racial and ethnic backgrounds, irrespective of their personal
histories. All subsidiaries are afforded equal treatment, and control is not centralized at
the headquarters. Various activities are undertaken with the aim of attaining a sustainable
competitive advantage across all facets of the enterprise. The selection of factory
locations is based on strategic considerations related to the availability of raw materials
and the efficiency of unit production. Additionally, there is a reciprocal flow of
communication between subsidiary branches and the central headquarters. Geocentrism is
a contemporary phenomenon that entails the adoption of a public image without
corresponding implementation by a company. While the involvement of multiple
individuals in decision-making processes can lead to increased business expenses, the
potential long-term advantages may outweigh these costs. Effective management and a
highly skilled workforce play a pivotal role in enhancing a company's reputation and
bolstering its financial performance.

DISCUSSION
Approaches Taken by TMC
The approach observed in TMC is characterized by polycentricism. The UK
division is run by an Italian with an excellent grasp of the European market, Japanese
language, and company culture (Carly 2011). To fulfill market demand, the area decided
what to manufacture, market, and strategy, while major inventions are transferred from
headquarters (Spear & Bowen 1999; Carly 2011). The UK division formerly used
hierarchical staff relations, a product of Japanese culture (Carly2011; Morgan et al2003).
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The headquarters has few foreign nationals, who must adjust to the company culture
(Mehri 2006).
Polycentrism is a managerial choice to shift from ethnocentrism to geocentrism to
address globalization (Bartlett & Ghoshal1998). The US subsidiary had to push the
headquarters to create the Toyota pickup van, which US families preferred (Spear
&Bowen 1999). Natives oversee most Japanese-managed companies (Howard 1998;
Carly 2011). TMC's polycentrism is more of a suppressed ethnocentrism or a fusion of
ethnocentrism and polycentrism, which does not comply with Perlmutter (1969)'s
individual practice. This is because TMC has been cautious deviating from home
practice, which will be reflected in the strategy. Toyota's initiatives to allow local variety
while preserving home culture exhibit divergence.

Strategies Taken by TMC

MNC designs, structures, and tactics have changed, and home-country strategies
are now more prevalent. A paradigm shift has been brought about by the idea that a firm
model must fit its environment in order to provide long-lasting competitive advantage.
Best practices provide a company a competitive edge, regardless of their source or
location. Some businesses want cross-breeding, and MNCs are categorized as multi-
domestic, global, international, or transnational strategy patterns using innovation
sources, market differentiation, cost management, and control mechanisms.

The cultural circumstances of each nation provide obstacles when it comes to

matching Toyota's fundamental principles with candidates for Technical Centers (TCN)
and Human Capital Networks (HCN). Toyota has put in place uniform standards and
efficient methods for hiring, putting a strong emphasis on communication and
encouraging the sharing of ideas. Interviewers must elicit responses about interviewees'
opinions of Toyota's value, highlighting the significance of distinguishing corporate value
from leadership to workers. Toyota forbids the entrance of anyone who disagree with its
stance on universal principles.
In Toyota's hiring procedure, experience is not very important. The corporation
seeks to hire people who have finished their undergraduate degrees since it will provide
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them the chance to apply Toyota principles to their professional pursuits. Experienced
people, however, could find it difficult to replace antiquated views with modern ones. For
instance, a member of the founding family of Toyota has traditionally held the role of
CEO, while a US citizen leads the US company, and a resident of an EU member state
leads the UK subsidiary.
To guarantee uniformity across all rules, the corporation centralizes its hiring and
compensation procedures. Important elements such as job rotation, group responsibility,
work organization, and plant architecture have been transmitted to all subsidiaries
without modification. Examples include the Japanese egalitarian incentive system that
was implemented to the Kentucky facility and the teamwork paradigm. The classification
of TMC as an international corporation is challenged by the presence of local variations
in unionism structure, job promotion, and job security, which align with the Japanese
organizational structure (Howard, 1998; Vasilash, 2011).
Toyota Motor Corporation's (TMC) UK division honored the long-standing
Japanese employment structure by delaying layoffs until the very last resort. The group
output determined the benefit distribution. While certain locations, including the UK, US,
Africa, and Australia, have local manufacturing, Toyota's 2010 recall of 9 million
automobiles shows shared innovation, suggesting a barrier to a shift towards international
practice. The highly developed Mississippi facility of TMC promoted the business as an
interdependent unit by using economies of scale and expertise. However, TMC's
worldwide reach took over since all of its subsidiaries were forced to wait until Japan
before recalling any faulty vehicles. Despite providing more profits, this went against the
global trend of operating a sophisticated facility in the US. The TMC transnational
strategy also entailed the sharing of products and innovations across subsidiaries, such as
the Toyota Hilux and Corolla being sold from South Africa to other regions of Africa and
Asia. Compared to Porter's (1996) strategic positioning, TMC's approach is more in line
with the Minztberg school of emergent strategy, demonstrating a greater degree of
divergence.

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ANALYSIS
Toyota Culture Influence on Integration
According to Liker (2004), the leaders of Toyoda Loom Works, established in the
1920s and later transformed into Toyota Motor Co. in the 1940s, held the belief that the
crucial factor for achieving success lay in the allocation of resources towards the
development and well-being of its workforce. Toyota places a high importance on
fostering employee trust and promoting continuous development, with a particular
emphasis on teamwork as a key competitive advantage. The HR department assumes a
crucial function within this context, as senior members of management, such as
manufacturing directors and managing directors, allocate a portion of their daily
schedules to HR-related matters. It is believed that the incorporation of knowledge and
experience from diverse sectors can enhance the alignment of HR policies with the
specific requirements of the enterprise. The Human Resources (HR) department
maintains close interdepartmental ties and holds a significant role within the organization.
The Toyota HR mechanism, which is distinct and exclusive to the organization,
facilitates the integration of various aspects of International Human Resource
Management (IHRM). This mechanism empowers HR managers to effectively harmonize
practices and policies with the overarching goals and objectives of the organization. The
human resources personnel have the ability to articulate policies that align with cross-
cultural customs and traditions, whereas the management is responsible for establishing
policy objectives and criteria. The collaboration between local human resources
personnel and management results in the development of integration policies that
effectively address cross-cultural demands and align with organizational objectives.
Toyota's objective is to demonstrate reverence for individuals and expand its
presence in international markets through the process of adjusting regulations to suit the
specific conditions of each respective locale. Toyota America adheres to an American-
style working system that takes into account the unique characteristics and customs of the
American workforce. In the Chinese market, Toyota engages in partnerships with state-
owned automotive companies to foster the growth of domestic enterprises and regulate
the influx of foreign capital, despite the prevailing negative historical perceptions
associated with Japan.
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TMC Parent Country National (PCN) Policy
Toyota has strict rules for expats, especially for PCN (parent country national)
workers, to help them deal with any problems that might come up during the process of
moving abroad. These policies include not letting people apply for jobs on their own,
giving promotions to people already in top management, and giving money to expats and
their families. Toyota also stresses the value of conversation and pre-training to help
expats and local workers work together better.
Communication is a key skill for expats, and they need to be able to speak the
language and talk to people. Toyota uses lean management to cut down on and get rid of
waste in HRM. They do this by putting an emphasis on local culture and traditions to
avoid culture clashes. Pre-training is long and thorough, with a focus on local customs
and the Japanese way of doing things. Toyota also has trust as a key value, especially in
its branches outside of Japan. Expats must have faith in local workers and not be afraid to
share information from headquarters. Toyota's trust system makes it easy for expats and
local workers to work together. Different touch activities are routines for foreigners to get
to know each other.
In short, Toyota's policies for expats, especially for PCN workers, are meant to
deal with problems that might come up during the process of moving abroad. Toyota
makes sure that its workers are ready for the difficulties of their new surroundings by
putting a lot of emphasis on communication, pre-training, and trust.

Recruitment and Selection on HCN and TCN

According to the assertions made by Paauwe and Dewe (1995), it is contended
that the recruitment of employees at middle-management and operative levels
predominantly occurs at the local level, thereby negating any discernible disparities
between international and domestic human resource management (HRM) practices.
Recruitment and selection processes for Human Capital Networks (HCN) and Technical
Centers (TCN) encounter difficulties in aligning Toyota's core values with the varied
cultural contexts prevalent in each respective country. Toyota has implemented

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standardized criteria and effective strategies for the process of recruiting and selecting
employees.
Effective communication plays a pivotal role in facilitating the exchange of ideas
and fostering the acquisition of Toyota's enterprise spirit by both HCN (Host Country
Nationals) and TCN (Third Country Nationals). Interviewers are required to inquire about
the interviewees' perspectives on the value of Toyota, with a particular emphasis on the
significance of recognizing the enterprise value that extends from leadership to
employees. Toyota prohibits the admission of individuals who hold dissenting views on
universal value concepts.
The significance of experience is not prioritized in Toyota's recruitment
procedure. The company exhibits a preference for hiring individuals who have completed
their undergraduate studies, providing them with ample opportunities to integrate Toyota
concepts into the perspectives of recent graduates. Nevertheless, individuals who have
accumulated extensive professional experience may encounter difficulties in substituting
outdated ideologies with more contemporary ones.

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 ATTACHMENT

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